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S7 > Ch.13 S7 > Flashcards

Ch.13 S7 Flashcards

1
Q

List the securities that are exempt from registration.

A

Government/ municipal bonds, commercial paper, BA, bank issues, non profit and small business issues

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2
Q

T/F: If a registration statement has not been filed with the SEC, BDs may not discuss new issue information.

A

T

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3
Q

A ____________ underwriting is used for shares not purchased through a rights offering.

A

Stand by

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4
Q

What type of syndicate has members responsible only for their specific allocation - Eastern or Western?

A

Western or Divided Syndicate

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5
Q

What is the difference between what the syndicate pays the issuer for the new issue and the pop?

A

The underwriting spread

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6
Q

The document underwriters submit to issuers when bidding on a competitive issue is called the ______________.

A

Official bud form

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7
Q

During the registration cooling off period, what should an agent do if a client sends a check to purchase securities?

A

Return the check to the customer

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8
Q

An offering of shares of the issuer and selling shareholders (officers) is a ____________ offering.

A

Primary/secondary

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9
Q

How is the underwriter determined for a Negotiated Sale?

A

The issuer selects the underwriter it would like to work with, and they negotiate the offering terms

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10
Q

What type of underwriting is cancelled is a specified portion is not sold?

A

Mini-max

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11
Q

May a preliminary prospectus (red herring) be sent during the cooling off period?

A

Yes, the red herring is used to obtain indication of interest from potential purchasers

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12
Q

What must issuers have to qualify for the Rule 147 intrastate exemption?

A

The issuer must have its principal place of business in that state

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13
Q

__________ orders are those in which only one member earns the total take down.

A

Member

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14
Q

List the priority of orders from first to fourth.

A
  1. Presale orders
  2. Group net orders
  3. Designated orders
  4. Member orders
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15
Q

What type of syndicate is formed when members retain a level of liability until all bonds are sold - Eastern or Western?

A

Eastern or Undivided Syndicate

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16
Q

The ___________ clause gives underwriters the ability to buy additional shares from the issuer to cove over-allotments.

A

Green Shoe

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17
Q

The Securities Act of 1933 regulates ____________.

A

New issues

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18
Q

What information would the manager of a municipal underwriting provide in the Syndicate Letter?

A

Underwriting type (negotiated/competitive), amount, allocation, priority of orders, type of account (eastern/western)

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19
Q

What is the purpose of a Tombstone Ad?

A

It calls attention to the new issuance of securities and members of the syndicate

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20
Q

__________ is the only form of price manipulation allowed by the SEC.

A

Stabilization

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21
Q

T/F: the legal opinion addresses the creditworthiness of an issue.

A

F; legal opinions address the legality (authority/validity) of the issue and the tax exemption of the interest

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22
Q

T/F: Shelf registration gives flexibility to the issuer by allowing delayed or continuous sales.

A

T

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23
Q

Besides BDs and their employees, who else is restricted from purchasing equity IPOs?

A

An employees immediate family if materially supported by, or sharing household with the employee

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24
Q

The total takedown is made up of __________ + __________.

A

Additional take down + sales concessions

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25
If a bond counsel has no concerns related to the new offering, the counsel may render an ___________ opinion.
Unqualified
26
T/F: The SEC judges an offerings investment merit and provides approval.
F
27
Written disclosure of a control relationship is normally found on a clients ____________.
Confirmation
28
What rules govern the registration of an issue in any state in which it will be offered?
Blue sky laws
29
What is the difference between a syndicate member and a firm in the selling group?
Syndicate members assume liability, while firms in the selling groups do not.
30
Is there a maximum number of stabilizing bids that may be placed?
Yes, one. It is usually placed by the syndicate manager
31
____________ is the buys refusal to accept the delivery of municipal bonds.
Rejection
32
What advertises that municipal bonds are available and invites underwriters to bid on a new competitive issue?
Notice of sale
33
Put the following four types of orders in the correct priority: Group Net, Member, Presale, Designated.
Presale, group net, designated, member (p,g,d,m)
34
__________ orders are given to a syndicate and identify two or more members (not all) to receive credit for the sale.
Designated
35
A regulation A Tier 2 exemption is permitted for issuers that raise no more than $_______ over 12 months.
75 million
36
What is the spread minus the managers fee?
The total takedown
37
What is the document that establishes the agreement between the issuer and the underwriter?
Underwriting agreement
38
How is the underwriter determined for a competitive sale?
The issuer invites syndicates to bid on the issue, with the best bid (lowest interest cost) winning the competition
39
What are the requirements to qualify for a Tier 1 exemption under Regulation A?
A maximum offering of $20 million over 12 months with no more than $6 million being offered by selling shareholders
40
What is the maximum sale allowed under Rule 144?
1% of the outstanding shares or average trading volume over the last 4 weeks whichever is greater
41
What are the requirements to qualify for a Tier 2 exemption under Regulation A?
A maximum offering of $75 million over 12 months with no more than $22.5 million being offered by selling shareholders
42
What does Rule 145 of the Securities Act of 1933 cover?
Registration/prospectus requirements of any reclassification of securities (primarily mergers or acquisitions)
43
T/F: Blue sky laws apply to BD and agents operating within a state.
T
44
Which department of a BD handles the underwriting and issuance of securities for clients?
IB
45
What orders are placed prior to the actual awarding of the issue to the syndicate?
Presale orders
46
T/F: Canadian companies are not religionless to use the Regulation A exemption.
F; both US and CAN are eligible
47
Why will the manager prioritize orders for the purchase of bonds sold through the syndicate?
To give the maximum benefit to the entire syndicate as a group versus any one particular member.
48
T/F: Form 144 must be filed for any sale of restricted or control stock, regardless of the size.
F; is the sale is for 5,000 shares or fewer and has a market value of $50,000 or less, no notification is required
49
In a firm commitment underwriting, unsold securities are retained by _____________.
The syndicate
50
The ____________ is the disclosure document concerning a Regulation A issue.
Offering circular
51
Reclassifications, merger or consolidation activities, and treads fees of assets are regulated under what provision?
Rule 145
52
A Regulation A tier 1 exemption is permitted for issuers that raise no more than $________ over 12 months.
$20 million
53
What is the disclosure document, similar to a prospectus, that is used for municipal bonds?
Official statement
54
What type of underwriting is cancelled if the entire issue is not sold?
All or none
55
Securities issued under the intrastate exemption may not be sold outside the state until _______ have passed.
6 months
56
Underwriters operating under a best efforts agreement with an issuer are acting in a _________ capacity.
Agency/ broker
57
Once Form 144 is filed, owners have _______ to sell their securities.
90 days
58
The holding period for unregistered (restricted) securities under Rule 144 is ________.
6 months
59
The Green Shoe Clause allows the issuer to expand the offering by a maximum of ______%
15%
60
Under Reg D private placement, _____ is the maximum number of non accredited investors allowed.
35
61
For how long may a new issue be sold under a shelf registration?
Up to 3 years
62
Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a _______.
QIB
63
The private placement disclosure document is the ___________.
Offering memorandum
64
What is the primary purpose of the Securities Act of 1933?
Provide investors with full and fair disclosure regarding new issues (prospectus)
65
In a best efforts underwriting, unsold securities are retained by ____________.
The issuer
66
What would a member of the syndicate (not the manager) earn for selling bonds?
The total takedown
67
Underwriters that have made a firm commitment to an issuer are acting in a ___________ capacity.
Principal / dealer
68
QIB stands for __________.
Qualified Institutional Buyer
69
The final __________ _______ will not appear in a red herring.
Offering price
70
QIBs are financial institutions that have a least $_________ invested in securities of non affiliated issuers.
100 million
71
When bidding on a new issue, what will underwriters first determine?
Reoffering Yield
72
The new issue rule covers what new issues?
All equity IPOs
73
Name the three components of the spread for a bond offering.
Managers fee, additional takedown, and sales concession
74
Is an official statement or preliminary official statement considered retail communication?
No, however, a summer or abstract of an official statement is considered retail communication
75
What type of opinion will a bond counsel render if the legality of the issue is in question or a lawsuit is pending?
Qualified
76
T/F: BDs and their employees may buy shares of equity IPOs from a syndicate.
F; they are considered restricted
77
Accredited investors have net worth of at least $________ or pre tax income in each of the last two years of $_________.
Net worth of $1 million (excluding primary home) and Annual Income of $200,000 ($300,000 if you’re married)
78
T/F: Stabilization is designed to artificially raise the price of a new issue.
F; stabilization is designed to support or keep a new issue price from falling
79
T/F: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.
T
80
Does Rule 144 require a specific holding period for control stock?
No, but the SEC must be notified when a sell order is placed and volume limitations apply
81
The highest price at which a stabilizing bid may be placed is the ___________.
POP
82
Indications of interest are _________ on both the customer and BD.
Non-binding
83
Though some securities are exempt from registration, nothing is exempt from the ______ provisions of the Act.
Anti fraud
84
What orders benefit the entire syndicate by percentage of liability?
Group net orders
85
A BD that is a part of the selling group (not a syndicate member would be entitled to the ___________.
Sales concession
86
Is it mandatory for a municipal issuer to prepare an official statement?
No, but if one has been prepared, the MSRB requires BDs to distribute it
87
T/F: Syndicate managers may change the priority of orders if justifiable and in the syndicates best interest.
T

S7 (18 decks)

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